Mexico lauded U.S. House of Representatives' approval of the U.S.-Mexico-Canada Agreement with officials hoping that the new deal could give the local economy its much-needed boost.
Officials expect that USMCA, which replaced the decades-long NAFTA, will encourage investments anew now that trade outlook is becoming stronger. Further USMCA improved on intellectual property, digital commerce, integration of financial services and support for small and medium-sized enterprises.
The USMCA has started pushing Mexican financial assets even ahead of the actual approval of the U.S. House of Representatives. Weeks in the lead of the actual passing, the Mexican peso was already trading near a five-month high.
Mexico's senate had also passed the new deal with the country's Foreign Relations Secretary Marcelo Ebrard saying it was an excellent development. He added that the new deal will open floods to jobs, investments and technological development that are otherwise curtailed if the old NAFTA remained.
For Ebrard, "a long period of uncertainty has ended" when respective officials signed the USMCA.
The USMCA gathered three of the world's largest common markets. The combined GDP coming from this assembly alone constitutes $23 trillion on top of the $1.16 trillion in commerce among the three countries. The United States alone accounted for about 48% of foreign direct investment in Mexico.
The approval of the USMCA came as Mexico endures a mild recession that started during the first half of 2019. In November, official data showed that the country's economy contracted by 0.1% quarter-on-quarter. The decline was apparent in seasonally-adjusted terms during both the first and second quarters of this year. At the time, its economy had already been coming from a shrunk margin with three months.
Analysts hoped that 2020 will see Mexico's economy on the uptrend by about 1.1% more. Hopefully, the country's oil and gas sector, as well as construction, recover from the slump due to decreased public spending.
Aside from the bleak trade outlook that took place during the USMCA negotiations period, the country has also endured several policy changes made by President Lopez Obrador. For instance, he canceled a $13-billion airport project for Mexico City. He had also opened private capital spending for the country's oil and gas sector.
Meanwhile, U.S. President Donald Trump and Canadian Prime Minister Justine Trudeau celebrated the USMCA approval. Both leaders took credits and held the deal as an important milestone for their respective leaderships.
